Nvidia supplier Ibiden weighs faster expansion to meet demand for artificial intelligence

(Bloomberg) — Ibiden, the dominant supplier of chip package substrates used in Nvidia Corp.’s advanced semiconductors, may need to step up the pace of ramping up production capacity to keep up with demand, according to its CEO Officer.

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Sales of the 112-year-old company’s AI substrates are strong with customers buying everything Ibiden has, said Koji Kawashima, the company’s CEO, adding that demand is likely to continue until at least next year.

Ebiden is building a new pile plant in Gifu Prefecture in central Japan, and is expected to start operating at 25% production capacity around the fourth quarter of 2025 before reaching 50% by March 2026. But Kawashima said that may not be enough. The company is in talks about when to bring the remaining 50% capacity online.

“Our customers have concerns,” he said in an interview. “We’re already being asked about our next investment and next capacity expansion.”

Ibidin shares rose as much as 5.5% in Tokyo on Monday, their biggest intraday gain in more than a month.

Ibiden’s clients include Intel Corp, Advanced Micro Devices Inc and Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., as well as Nvidia, according to data compiled by Bloomberg. Many of them consult with the Japanese company early in product development, because the substrates — which help transmit signals from the semiconductor to the circuit board — need to be tailored to each chip. The substrates must be designed to withstand the heat of the Nvidia GPU to form a complete AI chipset package with components such as memory.

Founded as an energy utility company in 1912, Ibiden developed its semiconductor expertise through a partnership with Intel developed by Kawashima by waiting every day in front of Santa Clara park engineers and executives to get product feedback in the early 1990s. At one point, Intel accounted for about 70% to 80% of Ibiden’s revenue from chip package substrates. That fell to about 30% in the fiscal year ending in March, as the U.S. chipmaker struggled to implement a turnaround that recently saw the firing of CEO Pat Gelsinger.

Reliance on Intel has hurt Ibiden’s shares, which are down about 40% this year. In October, Ibiden revised its earnings forecast downward after sluggish demand for components used in general-purpose servers outpaced growth associated with artificial intelligence servers. But while he noted the importance of expanding business with chipmakers other than Intel, Kawashima said he was confident Intel would bounce back.

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